PG&E rises amid backstop commitment news; Chesapeake better after term loan prices

By James McCandless

San Antonio, Dec. 11 – The distressed debt market continued to see focused activity in the utility and energy sectors on Wednesday.

PG&E Corp.’s notes rose after receiving new investors through new Chapter 11 plan backstop commitment letters.

In oil and gas, Chesapeake Energy Corp.’s issues saw better levels in the wake of pricing a new term loan and amending a tender offer.

Despite a dip in oil futures, Whiting Petroleum Corp.’s and Antero Resources Corp.’s paper rose while California Resources Corp.’s notes diverged.

Meanwhile, in telecom, Intelsat SA’s issues improved at the top of the space.

Sector peer Frontier Communications Corp.’s paper was also positive.

Food name Dean Foods Co.’s notes gained as the company works through its bankruptcy.

Auto parts maker Tenneco Inc.’s issues inched higher after receiving a bid for one of its segments.

PG&E rises

PG&E’s notes were seen rising by the end of the afternoon, traders said.

The 6.05% notes due 2034 improved by ¼ point to close at 106 bid.

In a filing, the San Francisco-based bankrupt electric utility reported it entered into new Chapter 11 plan backstop commitment letters under which additional investors have agreed to fund up to $12 billion to finance plan transactions through the purchase of common stock, Prospect News reported.

As previously reported, the company initially entered into plan backstop commitment letters with investors who agreed to fund up to $14 billion to finance the plan, followed by additional letters entered in November.

Also on Wednesday, news broke that a group of creditors has been pushing for California governor Gavin Newsom to reject a $13.5 billion wildfire victim settlement that was reached last week.

“If that happens, it gives them the leverage for their restructuring plan.”

Newsom has until Friday to approve the deal or not.

Chesapeake better

In the oil and gas space, Chesapeake Energy’s issues moved better, market sources said.

The 8% senior notes due 2025 rose 1 point to close at 58 bid. The 8% senior notes due 2027 picked up 1 point to close at 60 bid.

The Oklahoma City-based independent oil and gas producer’s structure continued to be highly active, most recently anchored by Tuesday’s news that it had priced a $1.5 billion term loan, which had been announced earlier in the week.

The 4.5-year loan bears interest at Libor plus 800 basis points per annum with an issue price of 98.

Also, a cash tender offer was increased to $950 per $1,000 principal amount of existing notes from $920 per $1,000 principal amount.

Oil space mixed

Although oil futures dipped, distressed energy tranches trended upward, traders said.

Futures were under pressure as the U.S. reported an unexpected build in crude inventories.

West Texas Intermediate crude oil futures for January delivery shed 48 cents to finish at $58.76 per barrel.

North Sea Brent crude oil futures for February delivery settled at $63.72 per barrel after a 62 cent loss.

Denver-based producer Whiting Petroleum’s paper rose.

The 6¼% senior notes due 2023 jumped up 6 points to close at 74¼ bid. The 6 5/8% senior paper due 2026 gained 1½ points to close at 64 bid.

Denver-based peer Antero Resources’ notes joined the trend.

The 5% senior notes due 2025 picked up 1½ points to close at 72½ bid.

Los Angeles-based producer California Resources’ issues diverged.

The 6% senior notes due 2024 shot up 5¼ points to close at 28½ bid. The 8% senior secured notes due 2022 shaved off ¾ point to close at 35¼ bid.

Intelsat, Frontier better

Meanwhile, in telecom, Intelsat’s paper improved, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose 1¾ points to close at 47¾ bid. The 9½% senior notes due 2023 garnered 3½ points to close at 61½ bid.

The Luxembourg-based satellite operator’s tranches remain a fixture among distressed traders, most recently for its heightened visibility as the U.S. government works to set terms for a C-band spectrum public auction.

After a long period of lobbying for a private auction, the Federal Communications Commission has set the stage for the auction next year.

Norwalk, Conn.-based wireline name Frontier’s notes were also positive.

The 10½% senior notes due 2022 improved by ½ point to close at 46 bid. The 11% senior notes due 2025 gained ½ point to close at 46 bid.

Dean Foods gains

Dairy name Dean Foods’ issues were seen gaining, traders said.

The 6½% senior notes due 2023 improved by 3½ points to close at 12¾ bid.

The Dallas-based dairy products producer has sunk further into distressed trading since filing for Chapter 11 bankruptcy last month.

Talks are ongoing for the company to be acquired by Dairy Farmers of America, the largest dairy co-op in America.

“There’s been some high-profile headlines trickling out in the last few weeks that are keeping it topical,” a trader said.

Tenneco up

Elsewhere, automotive company Tenneco’s paper inched higher, market sources said.

The 5% senior notes due 2026 gained ¼ point to close at 90¼ bid.

On Tuesday, the paper picked up 3 points.

After Tuesday’s news that the Lake Forest, Ill.-based automotive parts maker had received a bid for its powertrain segment from Apollo for $4.3 billion, its equity and notes were sent higher.

The company has yet to accept or reject the offer.

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